Vietnam rice transshipment seized in Sabah violating Kyoto Convention; something sinister behind seizure

KUALA LUMPUR, March 12 – Some 351 containers of rice from Vietnam for transshipment to the Philippines arrived in Kota Kinabalu, Sabah on September 11, 2018 had been seized by Malaysian customs potentially violating Kyoto Convention on Customs Transit.

These containers had all the documentations for transshipment with its intended destination to Labuan for transshipment to the Philippines, but due to the port congestion in Labuan, they were parked in Kota Kinabalu.

“Seven rice exporters from Vietnam claimed to have been given the run around by the Royal Malaysian Customs over their consignment of 351 containers bound for the Philippines that were seized during transshipment at the Sepanggar Port in Kota Kinabalu, Sabah, in October 5 last year.” (TMI)

NMT learned that the containers were first seized on September 19, 2018.

The customs seizure of the containers for transshipment, may have violated World Customer Organisation’s Kyoto Convention on Customs Transit.

It is claimed that the initial reason given for the seizure was due to not having Import License. However, Import License are required for importing rice to Malaysia for domestic consumption and these rice are not meant for Malaysia but for transshipment to the Philippines.

Efforts to get the seized containers released by customs had proven futile so far, and more worrying, the Vietnamese claim that they have been told by Roal Customs that their goods will soon be auctioned as they made no attempt to transship the containers.

No basis in fact or in law for the seizure and auction

In a letter dated March 8, to the AG Tommy Thomas, Sabah Cross-Border Trade Association Chairman, Nordin Ening who is assisting the Vietnamese claimed that there is no basis in fact or in law for the seizure.

“The cargo arrived on September 11 at Labuan, but due to port congestion, it was diverted to Kota Kinabalu Port where they were unloaded at the Customs Bonded Area.

“The Bonded Area is guarded and under 24 hour surveillance by the Royal Customs, MACC and Malaysian Police.” Nordin stated further.

It is claimed in the letter that on September 19, while waiting for the cargo to proceed to Labuan for transshipment, they were informed by Sepangar Port Manager, Clarence Miwil that the cargo was seized by customs due to not having Import License, even though there is no requirement for Import License on transshipment of cargo. NMT sighted letters from Ministry of Agriculture and National Security Council on allowance for transshipment.

There is no requirement for import license for goods meant for transshipment as per World Customs Organization’s (WCO) Kyoto Convention standard, which Malaysia is a signatory.

“Now by some strange twist, we are informed that Customs are going to auction our cargo since we made no attempt to transship”.

“This is absolutely preposterous! How were we expected to transship the cargo when we were served with a notice of seizure by Customs dated 5th October 2018?” he stated in the letter. NMT sighted the Customs seize order.

Smuggling accusation far fetched

NMT has learned from a government source that Malaysian Royal Customs are investigating the case as smuggling attempt. While this is consistent with the Vietnamese claim that the seizure was due to no import license, the idea of smuggling may be a little far fetched due to multiple reasons.

First, NMT sighted a document with Sepanggar Port’s stamp giving permission to for the 351 containers to land, so they landed with Customs permission.

We also sighted a Bill of Lading proving that the containers were meant for the Philippines via Labuan Port. The Kyoto Convention standard for transshipment only require one goods to be declared so this Bill of Lading satisfies that requirement.

The Bill of Lading clearly state that the goods are RICE. Considering that Malaysia only permit BERNAS to import rice, why would anyone trying to smuggle rice into the country put rice so clearly in their declaration?

The Vietnamese exporters claim to have been doing this transshipment to Philippines via Labuan for 20 years and this transshipment is no different except that it landed in Kota Kinabalu instead of Labuan due to Labuan’s congestion.

The congestion has been a problem for a while and there are various news reports to confirm it.

NMT sighted all the necessary documents from government agencies that suggest the transshipment claim has legitimacy.

Cabinet Ministers may have violated Kyoto Convention

WCO’s Kyoto Convention on Customs Transit Chapter 2 made it easy for transshipment between ports.

According to WCO website, Malaysia signed the Revised Kyoto Convention in 2008 without reservation therefore we are obligated to follow its standard.

NMT sighted letters from Ministry of Agriculture to Malaysian Royal Customs to stop all transshipment of rice.

We also sighted a letter from the Customs HQ in Putrajaya instructing to freeze activities of rice transshipment in all ports in Malaysia.

Since Malaysia signed the Kyoto Convention without reservation, we may have breached it with this action.

Bilateral trade relations may be affected

Vietnam Food Association already held a protest at the Malaysian embassy in Ho Chi Minh on Saturday.

Portal FMT reported that a spokesperson from the association said that their association will blacklist Sabah from future imports if the court case proceeded.

“Not only are the Vietnam shippers concerned. The Thais are also affected. They all know about this case and they won’t dare supply rice to Sabah any more.

“Other rice exporters in Myanmar, India and Pakistan know about this too.

“Because of this issue, we are all having second thoughts as it is too risky to supply rice to Sabah. The Customs can seize our cargo any time they want,” said Peter Doan, a spokesperson representing the seven companies.

Trade between Sabah and the southern Philippines is said to bring in more than RM2 billion a year.

Something sinister behind this seizure

A source close to the leadership of Pakatan Harapan told NMT that holding the containers for 5 months since October 2018 don’t make any sense since rice are perishables.  The source also suspects something sinister is behind this move.

Aside from saying that Customs plan to sell (via auction) to BERNAS, the source said that this could be an internal sabotage to make Pakatan Harapan administration look bad.

When this fiasco turns into an international crisis and Vietnam report to WCO/WTO, it will be bad for the country and who will be blamed but Pakatan Harapan?

The source also called out AG Tommy Thomas for badly handling the matter.

“How can he let a murderer go free at the request of Indonesia with potential backlash from North Korea but not handle this simpler Vietnam-Malaysia issue?” he lambasted.

-NMT